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TD SYNNEX Reports Fiscal 2024 First Quarter Results; Announces New $2B Share Repurchase Authorization

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TD SYNNEX (SNX) reported strong financial results for the fiscal first quarter, with revenue of $14.0 billion, non-GAAP gross billings of $19.3 billion, and net income of $172 million. The company achieved record margins, with diluted EPS at $1.93 and non-GAAP diluted EPS at $2.99. Cash provided by operations was $385 million, and free cash flow was $344 million. TD SYNNEX returned $235 million to shareholders through share repurchases and dividends, showing a 59% increase from the prior fiscal first quarter.
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The reported financial results of TD SYNNEX highlight several key performance indicators that are of interest to investors and market analysts. Observing the revenue decline of 7.6% juxtaposed against the increase in gross and non-GAAP gross margins suggests a mixed financial performance. The margin improvements, by 57 basis points and 52 basis points respectively, are indicative of enhanced operational efficiency or potentially a favorable shift in product mix towards higher-margin offerings.

Moreover, the substantial increase in capital returned to shareholders, with a 59% rise from the previous fiscal first quarter and a new $2 billion share repurchase authorization, reflects a strong balance sheet and a commitment to shareholder value. This strategy is often seen as a signal of management's confidence in the company's long-term profitability and is likely to be well-received in the market. However, it's also worth noting that such buyback programs can be a double-edged sword, as they reduce the company's cash reserves, which could be used for other growth opportunities.

Lastly, the reported healthy free cash flow of $344 million, a significant improvement from the negative free cash flow in the prior fiscal first quarter, demonstrates TD SYNNEX's ability to generate cash from its operations. This is a critical metric for assessing the company's financial health and its ability to sustain operations, invest in growth and return capital to shareholders.

From a market perspective, TD SYNNEX's performance must be contextualized within the broader IT distribution industry. The reported improving IT demand environment is a positive sign for the sector, potentially indicating a rebound from any prior downturns or market contractions. The company's ability to maintain a strong portfolio and leverage its business partner ecosystem for growth aligns with industry trends towards diversification and value-added services.

However, the decline in non-GAAP operating income by 4.1% suggests that there may be challenges in maintaining profitability levels, especially in the face of revenue declines. Regional performance variations, with the Americas experiencing an 8.5% revenue decrease and Asia-Pacific showing relative stability, point to the importance of geographic diversification and the varying economic conditions affecting each region.

Investors should consider the potential impact of currency fluctuations, as constant currency basis comparisons show a more pronounced revenue decrease. This underscores the risks posed by volatile exchange rates, especially for companies with significant international operations like TD SYNNEX.

Examining TD SYNNEX's financial results through an economic lens reveals insights into not only the company's performance but also economic conditions. The revenue decrease, especially when considered on a constant currency basis, could be reflective of broader economic trends such as market saturation, competitive pressures, or macroeconomic headwinds. The increase in gross margins, however, suggests that the company may be benefiting from economies of scale or has successfully implemented cost-saving measures.

The decision to increase dividends and the share repurchase program may also be a strategic response to the current low-interest-rate environment, where returning capital to shareholders can be more attractive than holding excess cash or making low-yield investments. Nonetheless, the forward-looking statements for the next quarter with a wide revenue outlook range indicate a level of uncertainty that could be attributed to unpredictable market conditions or strategic shifts in operations.

The overall financial health of TD SYNNEX, as evidenced by strong free cash flow and operational cash flow, suggests resilience in the face of economic fluctuations. However, the company's future performance will likely be influenced by both microeconomic factors such as operational efficiency and macroeconomic factors including global IT spending trends.

  • Revenue of $14.0 billion, within our outlook of $14.0 - $14.7 billion.
  • Non-GAAP gross billings(1) of $19.3 billion, within our outlook of $19.0 - $20.0 billion.
  • Gross margin and non-GAAP gross margin(1) of 7.20%, up 57 bps and 52 bps, respectively, from the prior fiscal first quarter.
  • Net income of $172 million, and non-GAAP net income(1) of $266 million.
  • Diluted earnings per share (“EPS”) of $1.93, and non-GAAP diluted EPS(1) of $2.99, at the upper end of our outlook.
  • Cash provided by operations of $385 million and free cash flow(1) of $344 million, compared to cash used in operations of $103 million and free cash flow(1) of negative $140 million in the prior fiscal first quarter.
  • Returned $235 million to shareholders in the fiscal first quarter in the form of $199 million of share repurchases and $36 million in dividends, representing a 59% increase from the prior fiscal first quarter.
  • Board of Directors approved a new $2 billion share repurchase authorization, supplementing the existing program, of which approximately $197 million remains.
  • Announced a quarterly cash dividend of $0.40 per common share, up 14% from the prior fiscal year.

FREMONT, Calif. & CLEARWATER, Fla.--(BUSINESS WIRE)-- TD SYNNEX (NYSE: SNX) today announced financial results for the fiscal first quarter ended February 29, 2024.

Consolidated Financial Highlights for the Fiscal 2024 First Quarter:

 

 

Q1 FY24

 

Q1 FY23

 

Net Change from Q1 FY23

Revenue ($M)

 

$

13,975.3

 

 

$

15,125.4

 

 

(7.6

)%

Non-GAAP gross billings ($M)(1)

 

$

19,266.7

 

 

$

20,202.2

 

 

(4.6

)%

Gross profit ($M)

 

$

1,005.8

 

 

$

1,003.6

 

 

0.2

%

Non-GAAP gross profit ($M)(1)

 

$

1,005.8

 

 

$

1,011.0

 

 

(0.5

)%

Gross margin

 

 

7.20

%

 

 

6.63

%

 

57 bps

Non-GAAP gross margin(1)

 

 

7.20

%

 

 

6.68

%

 

52 bps

Operating income ($M)

 

$

302.6

 

 

$

298.2

 

 

1.5

%

Non-GAAP operating income ($M)(1)

 

$

424.6

 

 

$

442.9

 

 

(4.1

)%

Operating margin

 

 

2.17

%

 

 

1.97

%

 

20 bps

Non-GAAP operating margin(1)

 

 

3.04

%

 

 

2.93

%

 

11 bps

Net income ($M)

 

$

172.1

 

 

$

167.0

 

 

3.1

%

Non-GAAP net income ($M)(1)

 

$

266.2

 

 

$

279.2

 

 

(4.7

)%

Diluted EPS

 

$

1.93

 

 

$

1.75

 

 

10.3

%

Non-GAAP Diluted EPS(1)

 

$

2.99

 

 

$

2.93

 

 

2.1

%

“We generated strong results in our fiscal first quarter, driven by our expansive portfolio and an improving IT demand environment. This resulted in record margins, EPS at the upper end of our expectations, healthy free cash flow and robust capital returned to shareholders,” said Rich Hume, CEO of TD SYNNEX. “We are leveraging our strong relationships across the business partner ecosystem along with our robust core and strategic technology portfolios to accelerate growth for our partners, while continuing to produce strong returns for our shareholders.”

Consolidated Fiscal 2024 First Quarter Highlights

  • Revenue was $14.0 billion, compared to $15.1 billion in the prior fiscal first quarter, representing a decrease of 7.6% and within our outlook. On a constant currency(1) basis, revenue decreased by 8.3% compared to the prior fiscal first quarter. A greater percentage of our revenue was presented on a net basis, which negatively impacted our revenue compared to the prior fiscal first quarter by approximately 3%.
  • Non-GAAP gross billings(1) were $19.3 billion, compared to $20.2 billion in the prior fiscal first quarter.
  • Gross profit was $1,006 million, compared to $1,004 million in the prior fiscal first quarter. Non-GAAP gross profit(1) was $1,006 million, compared to $1,011 million in the prior fiscal first quarter.
  • Gross margin was 7.2%, compared to 6.6% in the prior fiscal first quarter. Non-GAAP gross margin(1) was 7.2%, compared to 6.7% in the prior fiscal first quarter. The presentation of additional revenues on a net basis positively impacted our gross margin and non-GAAP gross margin(1) by approximately 23 basis points.
  • Operating income was $303 million, compared to $298 million in the prior fiscal first quarter. Non-GAAP operating income(1) was $425 million, compared to $443 million in the prior fiscal first quarter.
  • Operating margin was 2.2%, compared to 2.0% in the prior fiscal first quarter. Non-GAAP operating margin(1) was 3.0%, compared to 2.9% in the prior fiscal first quarter.
  • Diluted EPS was $1.93, compared to $1.75 in the prior fiscal first quarter. Non-GAAP diluted EPS(1) was $2.99, compared to $2.93 in the prior fiscal first quarter, at the upper end of our outlook.
  • Cash provided by operations of $385 million, and free cash flow(1) of $344 million, compared to cash used in operations of $103 million and free cash flow(1) of negative $140 million in the prior fiscal first quarter.
  • We returned $235 million to shareholders in the form of share repurchases and dividends, up 59% from the prior fiscal first quarter. 

Regional Fiscal 2024 First Quarter Highlights

  • Americas:
    • Revenue was $7.9 billion, compared to $8.6 billion in the prior fiscal first quarter, representing a decrease of 8.5%. On a constant currency(1) basis, revenue decreased by 8.6% compared to the prior fiscal first quarter. A greater percentage of our revenue was presented on a net basis, which negatively impacted our revenue compared to the prior fiscal first quarter by approximately 4%.
    • Non-GAAP gross billings(1) were $11.5 billion, compared to $12.0 billion in the prior fiscal first quarter, representing a decrease of 4.5%.
    • Operating income was $160 million, compared to $180 million in the prior fiscal first quarter. Non-GAAP operating income(1) was $240 million, compared to $266 million in the prior fiscal first quarter.
    • Operating margin was 2.0%, compared to 2.1% in the prior fiscal first quarter. Non-GAAP operating margin(1) was 3.0%, compared to 3.1% in the prior fiscal first quarter.
  • Europe:
    • Revenue was $5.1 billion, compared to $5.5 billion in the prior fiscal first quarter, representing a decrease of 7.3%. On a constant currency(1) basis, revenue decreased by 9.5% compared to the prior fiscal first quarter. A greater percentage of our revenue was presented on a net basis, which negatively impacted our revenue compared to the prior fiscal first quarter by approximately 2%.
    • Non-GAAP gross billings(1) were $6.6 billion, compared to $7.0 billion in the prior fiscal first quarter, representing a decrease of 5.4%.
    • Operating income was $108 million, compared to $88 million in the prior fiscal first quarter. Non-GAAP operating income(1) was $148 million, compared to $143 million in the prior fiscal first quarter.
    • Operating margin was 2.1%, compared to 1.6% in the prior fiscal first quarter. Non-GAAP operating margin(1) was 2.9%, compared to 2.6% in the prior fiscal first quarter.
  • Asia-Pacific and Japan:
    • Revenue was $955 million, compared to $966 million in the prior fiscal first quarter, representing a decrease of 1.2%. On a constant currency(1) basis, revenue increased by 1.7% compared to the prior fiscal first quarter.
    • Non-GAAP gross billings(1) were $1,159 million, compared to $1,177 million in the prior fiscal first quarter, representing a decrease of 1.6%.
    • Operating income was $35 million, compared to $30 million in the prior fiscal first quarter. Non-GAAP operating income(1) was $36 million, compared to $33 million in the prior fiscal first quarter.
    • Operating margin was 3.6%, compared to 3.2% in the prior fiscal first quarter. Non-GAAP operating margin(1) was 3.8%, compared to 3.4% in the prior fiscal first quarter. 

Fiscal 2024 Second Quarter Outlook

The following statements are based on TD SYNNEX’s current expectations for the fiscal 2024 second quarter. These statements are forward-looking and actual results may differ materially. Non-GAAP gross billings(1) include the impact of costs incurred and netted against revenue related to sales of third-party supplier service contracts, software as a service arrangements and certain fulfillment contracts, and the remaining non-GAAP financial measures exclude the impact of acquisition, integration and restructuring costs, amortization of intangible assets, share-based compensation, and the related tax effects thereon.

 

 

Q2 2024 Outlook

Revenue

 

$13.3 - $14.9 billion

Non-GAAP gross billings(1)

 

$18.4 - $19.6 billion

Net income

 

$139 - $183 million

Non-GAAP net income(1)

 

$219 - $263 million

Diluted earnings per share

 

$1.59 - $2.09

Non-GAAP diluted earnings per share(1)

 

$2.50 - $3.00

Estimated outstanding diluted weighted average shares

 

86.8 million

Share Repurchase Announcement

The TD SYNNEX Board of Directors has approved a share repurchase program of up to $2 billion of its common stock, supplementing the existing program of which approximately $197 million remains. Stock repurchases may be made at management's discretion from time to time through open market or privately negotiated transactions, including pursuant to one or more Rule 10b5-1 trading plans adopted in accordance with Rule 10b5-1 of the Securities Exchange Act of 1934.

Dividend

TD SYNNEX announced today that its Board of Directors declared a quarterly cash dividend of $0.40 per common share. The dividend is payable on April 26, 2024 to stockholders of record as of the close of business on April 12, 2024.

Conference Call and Webcast

TD SYNNEX will host a conference call today to discuss the 2024 fiscal first quarter results at 6:00 AM (PT)/9:00 AM (ET).

A live audio webcast of the earnings call will be accessible at ir.tdsynnex.com and a replay of the webcast will be available following the call.

About TD SYNNEX

TD SYNNEX (NYSE: SNX) is a leading global distributor and solutions aggregator for the IT ecosystem. We’re an innovative partner helping more than 150,000 customers in 100+ countries to maximize the value of technology investments, demonstrate business outcomes and unlock growth opportunities. Headquartered in Fremont, California, and Clearwater, Florida, TD SYNNEX’s 23,000 co-workers are dedicated to uniting compelling IT products, services and solutions from 2,500+ best-in-class technology vendors. Our edge-to-cloud portfolio is anchored in some of the highest-growth technology segments including cloud, cybersecurity, big data/analytics, AI, IoT, mobility and everything as a service.

TD SYNNEX is committed to serving customers and communities, and we believe we can have a positive impact on our people and our planet, intentionally acting as a respected corporate citizen. We aspire to be a diverse and inclusive employer of choice for talent across the IT ecosystem. For more information, visit TDSYNNEX.com, follow our newsroom or find us on LinkedIn, Facebook and Instagram.

(1)Use of Non-GAAP Financial Information

In addition to the financial results presented in accordance with GAAP, TD SYNNEX refers to revenues on a constant currency basis which adjusts for the translation effect of foreign currencies so that certain financial results can be viewed without the impact of fluctuations in foreign currency exchange rates, thereby facilitating period-to-period comparisons of our performance. Financial results adjusted for constant currency are calculated by translating current period activity using the comparable prior year periods’ currency conversion rate. TD SYNNEX uses non-GAAP gross billings, which adjusts revenues to exclude costs related to sales of third-party supplier service contracts, software as a service arrangements and certain fulfillment contracts. Non-GAAP gross billings are a useful non-GAAP metric in understanding the volume of our business activity and serve as an important performance metric in internally managing our operations. TD SYNNEX uses non-GAAP gross profit and non-GAAP gross margin which exclude purchase accounting adjustments. TD SYNNEX uses adjusted selling, general and administrative expenses which is a non-GAAP financial measure that excludes acquisition, integration and restructuring costs, the amortization of intangible assets and share-based compensation expense. TD SYNNEX uses non-GAAP operating income and non-GAAP operating margin which are non-GAAP financial measures that exclude acquisition, integration and restructuring costs, the amortization of intangible assets, share-based compensation expense and purchase accounting adjustments. TD SYNNEX also uses non-GAAP net income and non-GAAP diluted earnings per share, which are non-GAAP financial measures that exclude acquisition, integration and restructuring costs, the amortization of intangible assets, share-based compensation expense, purchase accounting adjustments, and the related tax effects thereon. Further, the Company uses adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”) which excludes other income (expense), net, acquisition, integration and restructuring costs, share-based compensation expense and purchase accounting adjustments. In prior periods, TD SYNNEX has excluded other items relevant to those periods for purposes of its non-GAAP financial measures.

Acquisition, integration and restructuring costs, which are expensed as incurred, primarily represent professional services costs for legal, banking, consulting and advisory services, severance and other personnel-related costs, share-based compensation expense and debt extinguishment fees that are incurred in connection with acquisition, integration, restructuring, and divestiture activities. From time to time, this category may also include transaction-related gains/losses on divestitures/spin-off of businesses, costs related to long-lived assets including impairment charges and accelerated depreciation and amortization expense due to changes in asset useful lives, as well as various other costs associated with the acquisition or divestiture.

TD SYNNEX’s acquisition activities have resulted in the recognition of finite-lived intangible assets which consist primarily of customer relationships and vendor lists. Finite-lived intangible assets are amortized over their estimated useful lives and are tested for impairment when events indicate that the carrying value may not be recoverable. The amortization of intangible assets is reflected in the Company’s Statements of Operations. Although intangible assets contribute to the Company’s revenue generation, the amortization of intangible assets does not directly relate to the sale of the Company’s products. Additionally, intangible asset amortization expense typically fluctuates based on the size and timing of the Company’s acquisition activity. Accordingly, the Company believes excluding the amortization of intangible assets, along with the other non-GAAP adjustments, which neither relate to the ordinary course of the Company’s business nor reflect the Company’s underlying business performance, enhances the Company’s and investors’ ability to compare the Company’s past financial performance with its current performance and to analyze underlying business performance and trends. Intangible asset amortization excluded from the related non-GAAP financial measure represents the entire amount recorded within the Company’s GAAP financial statements, and the revenue generated by the associated intangible assets has not been excluded from the related non-GAAP financial measure. Intangible asset amortization is excluded from the related non-GAAP financial measure because the amortization, unlike the related revenue, is not affected by operations of any particular period unless an intangible asset becomes impaired or the estimated useful life of an intangible asset is revised.

Share-based compensation expense is a non-cash expense arising from the grant of equity awards to employees and non-employee members of the Company’s Board of Directors based on the estimated fair value of those awards. Although share-based compensation is an important aspect of the compensation of our employees, the fair value of the share-based awards may bear little resemblance to the actual value realized upon the vesting or future exercise of the related share-based awards and the expense can vary significantly between periods as a result of the timing of grants of new stock-based awards, including grants in connection with acquisitions. Given the variety and timing of awards and the subjective assumptions that are necessary when calculating share-based compensation expense, TD SYNNEX believes this additional information allows investors to make additional comparisons between our operating results from period to period.

Purchase accounting adjustments are primarily related to the impact of recognizing the acquired vendor and customer liabilities related to the merger with Tech Data at fair value. These adjustments benefited our non-GAAP operating income through the third fiscal quarter of fiscal 2023 based on historical settlement patterns with our vendors and in accordance with the timing defined in our policy for releasing vendor and customer liabilities we deem remote to be paid.

Trailing fiscal four quarters ROIC is defined as the last four quarters’ tax effected operating income divided by the average of the last five quarterly balances of borrowings and equity, net of cash. Adjusted ROIC is calculated by excluding the tax effected impact of non-GAAP adjustments from operating income and by excluding the cumulative tax effected impact of current and prior period non-GAAP adjustments on equity.

TD SYNNEX also uses free cash flow, which is cash flow from operating activities, reduced by purchases of property and equipment. TD SYNNEX uses free cash flow to conduct and evaluate its business because, although it is similar to cash flow from operations, TD SYNNEX believes it is an additional useful measure of cash flows since purchases of property and equipment are a necessary component of ongoing operations. Free cash flow reflects an additional way of viewing TD SYNNEX’s liquidity that, when viewed with its GAAP results, provides a more complete understanding of factors and trends affecting its cash flows. Free cash flow has limitations as it does not represent the residual cash flow available for discretionary expenditures. For example, free cash flow does not incorporate payments for business acquisitions. Therefore, TD SYNNEX believes it is important to view free cash flow as a complement to its entire Consolidated Statements of Cash Flows.

TD SYNNEX management uses non-GAAP financial measures internally to understand, manage and evaluate the business, to establish operational goals, and in some cases for measuring performance for compensation purposes. These non-GAAP measures are intended to provide investors with an understanding of TD SYNNEX’s operational results and trends that more readily enable investors to analyze TD SYNNEX’s base financial and operating performance and to facilitate period-to-period comparisons and analysis of operational trends, as well as for planning and forecasting in future periods. Management believes these non-GAAP financial measures are useful to investors in allowing for greater transparency with respect to supplemental information used by management in its financial and operational decision-making. As these non-GAAP financial measures are not calculated in accordance with GAAP, they may not necessarily be comparable to similarly titled measures employed by other companies. These non-GAAP financial measures should not be considered in isolation or as a substitute for the comparable GAAP measures, and should be read only in conjunction with TD SYNNEX’s Consolidated Financial Statements prepared in accordance with GAAP. A reconciliation of TD SYNNEX’s GAAP to non-GAAP financial information is set forth in the supplemental tables at the end of this press release.

Safe Harbor Statement

Statements in this news release regarding TD SYNNEX that are not historical facts are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements are inherently uncertain, and shareholders and other potential investors must recognize that actual results may differ materially from TD SYNNEX expectations as a result of a variety of factors. These forward-looking statements may be identified by terms such as believe, foresee, expect, may, will, provide, could and should and the negative of these terms or other similar expressions. These forward-looking statements include, but are not limited to, statements about our strategy, demand, plans and positioning, capital allocation, as well as guidance related to the second quarter of 2024. Such forward-looking statements are based upon management’s current expectations and include known and unknown risks, uncertainties and other factors, many of which TD SYNNEX is unable to predict or control, that may cause TD SYNNEX actual results, performance, or plans to differ materially from any future results, performance or plans expressed or implied by such forward-looking statements.

These risks and uncertainties include, but are not limited to: the unfavorable outcome of any legal proceedings that have been or may be instituted against us; the ability to retain key personnel; general economic and political conditions; continued or increased weakness in information technology spending; seasonality; the loss or consolidation of one or more of our significant original equipment manufacturer, or OEM, suppliers or customers; market acceptance and product life of the products we assemble and distribute; competitive conditions in our industry and their impact on our margins; pricing, margin and other terms with our OEM suppliers; our ability to gain market share; variations in supplier-sponsored programs; changes in our costs and operating expenses; the timing and amount of returns to our shareholders via repurchases of our common stock and dividends; changes in foreign currency exchange rates; increased inflation; changes in tax laws; risks associated with our international operations; uncertainties and variability in demand by our reseller and integration customers; supply shortages or delays; any termination or reduction in our floor plan financing arrangements; credit exposure to our reseller customers and negative trends in their businesses; any incidents of theft; the declaration, timing and payment of dividends, and the Board’s reassessment thereof; and other risks and uncertainties detailed in our Form 10-K for the fiscal year ended November 30, 2023 and subsequent SEC filings. Statements included in this press release are based upon information known to TD SYNNEX as of the date of this release, and TD SYNNEX assumes no obligation to update information contained in this press release unless otherwise required by law.

Copyright 2024 TD SYNNEX CORPORATION. All rights reserved. TD SYNNEX, the TD SYNNEX Logo, and all other TD SYNNEX company, product and services names and slogans are trademarks or registered trademarks of TD SYNNEX Corporation. Other names and marks are the property of their respective owners.

TD SYNNEX Corporation

Consolidated Balance Sheets

(Currency and share amounts in thousands, except par value)

(Amounts may not add or compute due to rounding)

(Unaudited)

 

 

 

 

 

 

 

February 29, 2024

 

November 30, 2023

ASSETS

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

1,030,946

 

 

$

1,033,776

 

Accounts receivable, net

 

 

8,902,803

 

 

 

10,297,814

 

Receivables from vendors, net

 

 

914,910

 

 

 

964,334

 

Inventories

 

 

7,091,146

 

 

 

7,146,274

 

Other current assets

 

 

640,901

 

 

 

642,238

 

Total current assets

 

 

18,580,706

 

 

 

20,084,436

 

Property and equipment, net

 

 

459,093

 

 

 

450,024

 

Goodwill

 

 

3,902,232

 

 

 

3,904,170

 

Intangible assets, net

 

 

4,162,437

 

 

 

4,244,314

 

Other assets, net

 

 

695,561

 

 

 

729,870

 

Total assets

 

$

27,800,029

 

 

$

29,412,814

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

Current liabilities:

 

 

 

 

Borrowings, current

 

$

926,739

 

 

$

983,585

 

Accounts payable

 

 

12,372,749

 

 

 

13,347,281

 

Other accrued liabilities

 

 

1,955,444

 

 

 

2,407,896

 

Total current liabilities

 

 

15,254,932

 

 

 

16,738,762

 

Long-term borrowings

 

 

3,082,367

 

 

 

3,099,193

 

Other long-term liabilities

 

 

493,031

 

 

 

498,656

 

Deferred tax liabilities

 

 

867,524

 

 

 

893,021

 

Total liabilities

 

 

19,697,854

 

 

 

21,229,632

 

Stockholders’ equity:

 

 

 

 

Preferred stock, $0.001 par value, 5,000 shares authorized, no shares issued or outstanding

 

 

 

 

 

 

Common stock, $0.001 par value, 200,000 shares authorized, 99,012 shares issued as of both February 29, 2024 and November 30, 2023

 

 

99

 

 

 

99

 

Additional paid-in capital

 

 

7,438,820

 

 

 

7,435,274

 

Treasury stock, 12,171 and 10,343 shares as of February 29, 2024 and November 30, 2023, respectively

 

 

(1,138,919

)

 

 

(949,714

)

Accumulated other comprehensive loss

 

 

(539,072

)

 

 

(507,248

)

Retained earnings

 

 

2,341,247

 

 

 

2,204,771

 

Total stockholders' equity

 

 

8,102,175

 

 

 

8,183,182

 

Total liabilities and equity

 

$

27,800,029

 

 

$

29,412,814

 

TD SYNNEX Corporation

Consolidated Statements of Operations

(Currency and share amounts in thousands, except per share amounts)

(Amounts may not add or compute due to rounding)

(Unaudited)

 

 

 

 

 

Three Months Ended

 

 

February 29, 2024

 

February 28, 2023

Revenue

 

$

13,975,253

 

 

$

15,125,371

 

Cost of revenue

 

 

(12,969,487

)

 

 

(14,121,804

)

Gross profit

 

 

1,005,766

 

 

 

1,003,567

 

Selling, general and administrative expenses

 

 

(671,545

)

 

 

(654,223

)

Acquisition, integration and restructuring costs

 

 

(31,649

)

 

 

(51,182

)

Operating income

 

 

302,572

 

 

 

298,162

 

Interest expense and finance charges, net

 

 

(75,891

)

 

 

(80,200

)

Other expense, net

 

 

(2,884

)

 

 

(156

)

Income before income taxes

 

 

223,797

 

 

 

217,806

 

Provision for income taxes

 

 

(51,669

)

 

 

(50,786

)

Net income

 

$

172,128

 

 

$

167,020

 

Earnings per common share:

 

 

 

 

Basic

 

$

1.94

 

 

$

1.76

 

Diluted

 

$

1.93

 

 

$

1.75

 

Weighted-average common shares outstanding:

 

 

 

 

Basic

 

 

87,891

 

 

 

94,259

 

Diluted

 

 

88,203

 

 

 

94,539

 

TD SYNNEX Corporation

Regional Financial Highlights - Fiscal 2024 First Quarter

(Currency in millions)

(Amounts may not add or compute due to rounding)

 

 

 

 

 

 

 

 

 

Q1 FY24

 

Q1 FY23

 

Net Change from
Q1 FY23

Americas

 

 

 

 

 

 

Revenue

 

$

7,903.1

 

 

$

8,638.7

 

 

(8.5

)%

Non-GAAP gross billings(1)

 

$

11,506.3

 

 

$

12,043.9

 

 

(4.5

)%

Operating income

 

$

159.7

 

 

$

179.5

 

 

(11.0

)%

Non-GAAP operating income(1)

 

$

240.3

 

 

$

266.4

 

 

(9.8

)%

Operating margin

 

 

2.02

%

 

 

2.08

%

 

(6) bps

Non-GAAP operating margin(1)

 

 

3.04

%

 

 

3.08

%

 

(4) bps

 

 

 

 

 

 

 

Europe

 

 

 

 

 

 

Revenue

 

$

5,117.3

 

 

$

5,520.4

 

 

(7.3

)%

Non-GAAP gross billings(1)

 

$

6,601.4

 

 

$

6,980.9

 

 

(5.4

)%

Operating income

 

$

108.3

 

 

$

88.2

 

 

22.8

%

Non-GAAP operating income(1)

 

$

147.8

 

 

$

143.4

 

 

3.1

%

Operating margin

 

 

2.12

%

 

 

1.60

%

 

52 bps

Non-GAAP operating margin(1)

 

 

2.89

%

 

 

2.60

%

 

29 bps

 

 

 

 

 

 

 

Asia-Pacific and Japan

 

 

 

 

 

 

Revenue

 

$

954.9

 

 

$

966.2

 

 

(1.2

)%

Non-GAAP gross billings(1)

 

$

1,159.0

 

 

$

1,177.3

 

 

(1.6

)%

Operating income

 

$

34.6

 

 

$

30.5

 

 

13.4

%

Non-GAAP operating income(1)

 

$

36.4

 

 

$

33.1

 

 

10.0

%

Operating margin

 

 

3.62

%

 

 

3.15

%

 

47 bps

Non-GAAP operating margin(1)

 

 

3.82

%

 

 

3.42

%

 

40 bps

 

 

 

 

 

 

 

(1) A reconciliation of TD SYNNEX’s GAAP to non-GAAP financial information is set forth in the supplemental tables at the end of this press release.

 

TD SYNNEX Corporation

Reconciliation of GAAP to Non-GAAP financial measures

(Currency in thousands)

(Amounts may not add or compute due to rounding)

 

 

 

 

 

Three Months Ended

 

 

February 29, 2024

 

February 28, 2023

Revenue in constant currency

 

 

 

 

Consolidated

 

 

 

 

Revenue

 

$

13,975,253

 

 

$

15,125,371

Impact of changes in foreign currencies

 

 

(102,478

)

 

 

Revenue in constant currency

 

$

13,872,775

 

 

$

15,125,371

 

 

 

 

 

Americas

 

 

 

 

Revenue

 

$

7,903,096

 

 

$

8,638,704

Impact of changes in foreign currencies

 

 

(10,843

)

 

 

Revenue in constant currency

 

$

7,892,253

 

 

$

8,638,704

 

 

 

 

 

Europe

 

 

 

 

Revenue

 

$

5,117,252

 

 

$

5,520,437

Impact of changes in foreign currencies

 

 

(119,360

)

 

 

Revenue in constant currency

 

$

4,997,892

 

 

$

5,520,437

 

 

 

 

 

Asia-Pacific and Japan

 

 

 

 

Revenue

 

$

954,905

 

 

$

966,230

Impact of changes in foreign currencies

 

 

27,725

 

 

 

Revenue in constant currency

 

$

982,630

 

 

$

966,230

TD SYNNEX Corporation

Reconciliation of GAAP to Non-GAAP financial measures

(Currency in thousands)

(Amounts may not add or compute due to rounding)

 

 

 

 

 

Three Months Ended

 

 

February 29, 2024

 

February 28, 2023

Non-GAAP gross billings

 

 

 

 

Consolidated

 

 

 

 

Revenue

 

$

13,975,253

 

$

15,125,371

Costs incurred and netted against revenue related to sales of third-party supplier service contracts, software as a service arrangements and certain fulfillment contracts

 

 

5,291,480

 

 

5,076,822

Non-GAAP gross billings

 

$

19,266,733

 

$

20,202,193

 

 

 

 

 

Americas

 

 

 

 

Revenue

 

$

7,903,096

 

$

8,638,704

Costs incurred and netted against revenue related to sales of third-party supplier service contracts, software as a service arrangements and certain fulfillment contracts

 

 

3,603,247

 

 

3,405,240

Non-GAAP gross billings

 

$

11,506,343

 

 

12,043,944

 

 

 

 

 

Europe

 

 

 

 

Revenue

 

$

5,117,252

 

$

5,520,437

Costs incurred and netted against revenue related to sales of third-party supplier service contracts, software as a service arrangements and certain fulfillment contracts

 

 

1,484,128

 

 

1,460,494

Non-GAAP gross billings

 

$

6,601,380

 

$

6,980,931

 

 

 

 

 

Asia-Pacific and Japan

 

 

 

 

Revenue

 

$

954,905

 

$

966,230

Costs incurred and netted against revenue related to sales of third-party supplier service contracts, software as a service arrangements and certain fulfillment contracts

 

 

204,105

 

 

211,088

Non-GAAP gross billings

 

$

1,159,010

 

$

1,177,318

 

TD SYNNEX Corporation

Reconciliation of GAAP to Non-GAAP financial measures

(Currency in thousands)

(Amounts may not add or compute due to rounding)

 

 

 

 

 

Three Months Ended

 

 

February 29, 2024

 

February 28, 2023

Non-GAAP gross profit & non-GAAP gross margin

 

 

 

 

Revenue

 

$

13,975,253

 

 

$

15,125,371

 

 

 

 

 

 

Gross profit

 

$

1,005,766

 

 

$

1,003,567

 

Purchase accounting adjustments

 

 

 

 

 

7,450

 

Non-GAAP gross profit

 

$

1,005,766

 

 

$

1,011,017

 

 

 

 

 

 

Gross margin

 

 

7.20

%

 

 

6.63

%

Non-GAAP gross margin

 

 

7.20

%

 

 

6.68

%

 

 

Three Months Ended

 

 

February 29, 2024

 

February 28, 2023

Adjusted selling, general and administrative expenses

 

 

 

 

Revenue

 

$

13,975,253

 

 

$

15,125,371

 

Costs incurred and netted against revenue related to sales of third-party supplier service contracts, software as a service arrangements and certain fulfillment contracts

 

 

5,291,480

 

 

 

5,076,822

 

Non-GAAP gross billings

 

$

19,266,733

 

 

$

20,202,193

 

 

 

 

 

 

Selling, general and administrative expenses(1)

 

$

703,194

 

 

$

705,405

 

Acquisition, integration and restructuring costs

 

 

31,649

 

 

 

51,182

 

Amortization of intangibles

 

 

72,877

 

 

 

73,023

 

Share-based compensation

 

 

17,490

 

 

 

13,074

 

Adjusted selling, general and administrative expenses

 

$

581,178

 

 

$

568,126

 

 

 

 

 

 

Selling, general and administrative expenses as a percentage of revenue

 

 

5.03

%

 

 

4.66

%

Adjusted selling, general and administrative expenses as a percentage of non-GAAP gross billings

 

 

3.02

%

 

 

2.81

%

(1) Includes acquisition, integration and restructuring costs, which are presented separately on the Consolidated Statements of Operations.

 

TD SYNNEX Corporation

Reconciliation of GAAP to Non-GAAP financial measures

(Currency in thousands)

(Amounts may not add or compute due to rounding)

 

 

 

 

 

Three Months Ended

 

 

February 29, 2024

 

February 28, 2023

Non-GAAP operating income & non-GAAP operating margin - Consolidated

 

 

 

 

Revenue

 

$

13,975,253

 

 

$

15,125,371

 

 

 

 

 

 

Operating income

 

$

302,572

 

 

$

298,162

 

Acquisition, integration and restructuring costs

 

 

31,649

 

 

 

51,182

 

Amortization of intangibles

 

 

72,877

 

 

 

73,023

 

Share-based compensation

 

 

17,490

 

 

 

13,074

 

Purchase accounting adjustments

 

 

 

 

 

7,450

 

Non-GAAP operating income

 

$

424,588

 

 

$

442,891

 

 

 

 

 

 

Operating margin

 

 

2.17

%

 

 

1.97

%

Non-GAAP operating margin

 

 

3.04

%

 

 

2.93

%

 

 

Three Months Ended

 

 

February 29, 2024

 

February 28, 2023

Non-GAAP operating income & non-GAAP operating margin - Americas

 

 

 

 

Revenue

 

$

7,903,096

 

 

$

8,638,704

 

 

 

 

 

 

Operating income

 

$

159,682

 

 

$

179,505

 

Acquisition, integration and restructuring costs

 

 

27,372

 

 

 

35,133

 

Amortization of intangibles

 

 

41,453

 

 

 

42,414

 

Share-based compensation

 

 

11,798

 

 

 

9,362

 

Non-GAAP operating income

 

$

240,305

 

 

$

266,414

 

 

 

 

 

 

Operating margin

 

 

2.02

%

 

 

2.08

%

Non-GAAP operating margin

 

 

3.04

%

 

 

3.08

%

 

 

Three Months Ended

 

 

February 29, 2024

 

February 28, 2023

Non-GAAP operating income & non-GAAP operating margin - Europe

 

 

 

 

Revenue

 

$

5,117,252

 

 

$

5,520,437

 

 

 

 

 

 

Operating income

 

$

108,325

 

 

$

88,205

 

Acquisition, integration and restructuring costs

 

 

3,952

 

 

 

14,583

 

Amortization of intangibles

 

 

30,802

 

 

 

29,985

 

Share-based compensation

 

 

4,763

 

 

 

3,176

 

Purchase accounting adjustments

 

 

 

 

 

7,450

 

Non-GAAP operating income

 

$

147,842

 

 

$

143,399

 

 

 

 

 

 

Operating margin

 

 

2.12

%

 

 

1.60

%

Non-GAAP operating margin

 

 

2.89

%

 

 

2.60

%

 

 

Three Months Ended

 

 

February 29, 2024

 

February 28, 2023

Non-GAAP operating income & non-GAAP operating margin - Asia-Pacific and Japan

 

 

 

 

Revenue

 

$

954,905

 

 

$

966,230

 

 

 

 

 

 

Operating income

 

$

34,565

 

 

$

30,452

 

Acquisition, integration and restructuring costs

 

 

325

 

 

 

1,466

 

Amortization of intangibles

 

 

622

 

 

 

624

 

Share-based compensation

 

 

929

 

 

 

536

 

Non-GAAP operating income

 

$

36,441

 

 

$

33,078

 

 

 

 

 

 

Operating margin

 

 

3.62

%

 

 

3.15

%

Non-GAAP operating margin

 

 

3.82

%

 

 

3.42

%

 

TD SYNNEX Corporation

Reconciliation of GAAP to Non-GAAP financial measures

(Currency in thousands, except per share amounts)

(Amounts may not add or compute due to rounding)

 

 

 

 

 

Three Months Ended

 

 

February 29, 2024

 

February 28, 2023

Adjusted EBITDA

 

 

 

 

Net income

 

$

172,128

 

$

167,020

Interest expense and finance charges, net

 

 

75,891

 

 

80,200

Provision for income taxes

 

 

51,669

 

 

50,786

Depreciation(1)

 

 

27,742

 

 

31,654

Amortization of intangibles

 

 

72,877

 

 

73,023

EBITDA

 

$

400,307

 

$

402,683

Other expense, net

 

 

2,884

 

 

156

Acquisition, integration and restructuring costs

 

 

31,254

 

 

45,029

Share-based compensation

 

 

17,490

 

 

13,074

Purchase accounting adjustments

 

 

 

 

7,450

Adjusted EBITDA

 

$

451,935

 

$

468,392

(1) Includes depreciation recorded in acquisition, integration, and restructuring costs.

 

 

 

Three Months Ended

 

 

February 29, 2024

 

February 28, 2023

Non-GAAP net income & non-GAAP diluted EPS(1)

 

 

 

 

Net income

 

$

172,128

 

 

$

167,020

 

Acquisition, integration and restructuring costs

 

 

31,649

 

 

 

53,424

 

Amortization of intangibles

 

 

72,877

 

 

 

73,023

 

Share-based compensation

 

 

17,490

 

 

 

13,074

 

Purchase accounting adjustments

 

 

 

 

 

7,450

 

Income taxes related to the above

 

 

(27,921

)

 

 

(34,756

)

Non-GAAP net income

 

$

266,223

 

 

$

279,235

 

 

 

 

 

 

Diluted EPS(1)

 

$

1.93

 

 

$

1.75

 

Acquisition, integration and restructuring costs

 

 

0.36

 

 

 

0.56

 

Amortization of intangibles

 

 

0.81

 

 

 

0.76

 

Share-based compensation

 

 

0.20

 

 

 

0.14

 

Purchase accounting adjustments

 

 

 

 

 

0.08

 

Income taxes related to the above

 

 

(0.31

)

 

 

(0.36

)

Non-GAAP Diluted EPS(1)

 

$

2.99

 

 

$

2.93

(1) Diluted EPS is calculated using the two-class method. Unvested restricted stock awards granted to employees are considered participating securities. For purposes of calculating Diluted EPS, net income allocated to participating securities was approximately 0.9% and 0.8% of net income for the three months ended February 29, 2024 and February 28, 2023, respectively.

 

TD SYNNEX Corporation

Reconciliation of GAAP to Non-GAAP financial measures

(Amounts may not add or compute due to rounding)

 

 

 

 

 

Three Months Ended

(Currency in thousands)

 

February 29, 2024

 

February 28, 2023

Free cash flow

 

 

 

 

Net cash provided by (used in) operating activities

 

$

384,709

 

 

$

(102,795

)

Purchases of property and equipment

 

 

(41,088

)

 

 

(37,278

)

Free cash flow

 

$

343,621

 

 

$

(140,073

)

 

 

Forecast

 

 

Three Months Ending May 31, 2024

(Currency in millions, except per share amounts)

 

Low

 

High

Net income

 

$

139

 

 

$

183

 

Acquisition, integration and restructuring costs

 

 

18

 

 

 

18

 

Amortization of intangibles

 

 

75

 

 

 

75

 

Share-based compensation

 

 

11

 

 

 

11

 

Income taxes related to the above

 

 

(24

)

 

 

(24

)

Non-GAAP net income

 

$

219

 

 

$

263

 

 

 

 

 

 

Diluted EPS(1)

 

$

1.59

 

 

$

2.09

 

Acquisition, integration and restructuring costs

 

 

0.20

 

 

 

0.20

 

Amortization of intangibles

 

 

0.86

 

 

 

0.86

 

Share-based compensation

 

 

0.12

 

 

 

0.12

 

Income taxes related to the above

 

 

(0.27

)

 

 

(0.27

)

Non-GAAP Diluted EPS(1)

 

$

2.50

 

 

$

3.00

(1) Diluted EPS is calculated using the two-class method. Unvested restricted stock awards granted to employees are considered participating securities. Net income allocable to participating securities is estimated to be approximately 0.9% of the forecast net income for the three months ending May 31, 2024.

 

 

Forecast

 

 

Three Months Ending

(Currency in billions)

 

May 31, 2024

Non-GAAP gross billings

 

Low

 

High

Revenue

 

$

13.3

 

$

14.9

Costs incurred and netted against revenue related to sales of third-party supplier service contracts, software as a service arrangements and certain fulfillment contracts

 

 

5.1

 

 

4.7

Non-GAAP gross billings

 

$

18.4

 

$

19.6

 

TD SYNNEX Corporation

Calculation of Financial Metrics

Return on Invested Capital (“ROIC”)

(Currency in thousands)

(Amounts may not add or compute due to rounding)

 

 

 

 

 

 

 

February 29, 2024

 

February 28, 2023

ROIC

 

 

 

 

Operating income (trailing fiscal four quarters)

 

$

1,082,442

 

 

$

1,126,595

 

Income taxes on operating income(1)

 

 

(222,351

)

 

 

(237,869

)

Operating income after taxes

 

$

860,091

 

 

$

888,726

 

 

 

 

 

 

Total invested capital comprising equity and borrowings, less cash (last five quarters average)

 

$

11,405,681

 

 

$

11,857,925

 

 

 

 

 

 

ROIC

 

 

7.5

%

 

 

7.5

%

 

 

 

 

 

Adjusted ROIC

 

 

 

 

Non-GAAP operating income (trailing fiscal four quarters)

 

$

1,624,021

 

 

$

1,735,073

 

Income taxes on non-GAAP operating income(1)

 

 

(364,991

)

 

 

(401,326

)

Non-GAAP operating income after taxes

 

$

1,259,030

 

 

$

1,333,747

 

 

 

 

 

 

Total invested capital comprising equity and borrowings, less cash (last five quarters average)

 

$

11,405,681

 

 

$

11,857,925

 

Tax effected impact of cumulative non-GAAP adjustments (last five quarters average)

 

 

1,172,514

 

 

 

742,036

 

Total non-GAAP invested capital (last five quarters average)

 

$

12,578,195

 

 

$

12,599,961

 

 

 

 

 

 

Adjusted ROIC

 

 

10.0

%

 

 

10.6

%

(1) Income taxes on GAAP operating income was calculated using the effective year-to-date tax rates during the respective periods. Income taxes on non-GAAP operating income was calculated by excluding the tax effect of taxable and deductible non-GAAP adjustments using the effective year-to-date tax rate during the respective periods.

 

TD SYNNEX Corporation

Calculation of Financial Metrics

Cash Conversion Cycle

(Currency in thousands)

(Amounts may not add or compute due to rounding)

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

 

February 29, 2024

 

February 28, 2023

Days sales outstanding

 

 

 

 

 

 

Revenue

 

(a)

 

$

13,975,253

 

$

15,125,371

Accounts receivable, net

 

(b)

 

 

8,902,803

 

 

9,357,059

Days sales outstanding

 

(c) = ((b)/(a))*the number of days during the period

 

 

58

 

 

56

 

 

 

 

 

 

 

Days inventory outstanding

 

 

 

 

 

 

Cost of revenue

 

(d)

 

$

12,969,487

 

$

14,121,804

Inventories

 

(e)

 

 

7,091,146

 

 

8,372,834

Days inventory outstanding

 

(f) = ((e)/(d))*the number of days during the period

 

 

50

 

 

53

 

 

 

 

 

 

 

Days payable outstanding

 

 

 

 

 

 

Cost of revenue

 

(g)

 

$

12,969,487

 

$

14,121,804

Accounts payable

 

(h)

 

 

12,372,749

 

 

12,997,681

Days payable outstanding

 

(i) = ((h)/(g))*the number of days during the period

 

 

87

 

 

83

 

 

 

 

 

 

 

Cash conversion cycle

 

(j) = (c)+(f)-(i)

 

 

21

 

 

26

 

Liz Morali

Investor Relations

510-668-8436

ir@tdsynnex.com

Bobby Eagle

Global Corporate Communications

727-538-5864

bobby.eagle@tdsynnex.com

Source: TD SYNNEX

FAQ

What was TD SYNNEX's revenue for the fiscal first quarter?

TD SYNNEX reported revenue of $14.0 billion for the fiscal first quarter.

What were TD SYNNEX's non-GAAP gross billings for the fiscal first quarter?

TD SYNNEX's non-GAAP gross billings were $19.3 billion for the fiscal first quarter.

What was TD SYNNEX's net income for the fiscal first quarter?

TD SYNNEX reported a net income of $172 million for the fiscal first quarter.

What were TD SYNNEX's diluted EPS and non-GAAP diluted EPS for the fiscal first quarter?

TD SYNNEX's diluted EPS was $1.93, and non-GAAP diluted EPS was $2.99 for the fiscal first quarter.

How much cash did TD SYNNEX provide from operations in the fiscal first quarter?

TD SYNNEX provided $385 million from operations in the fiscal first quarter.

How much cash flow did TD SYNNEX generate in the fiscal first quarter?

TD SYNNEX generated free cash flow of $344 million in the fiscal first quarter.

How much did TD SYNNEX return to shareholders in the form of share repurchases and dividends in the fiscal first quarter?

TD SYNNEX returned $235 million to shareholders in the form of share repurchases and dividends in the fiscal first quarter.

What was the increase in capital returned to shareholders compared to the prior fiscal first quarter?

TD SYNNEX showed a 59% increase in capital returned to shareholders from the prior fiscal first quarter.

What was the new share repurchase authorization approved by TD SYNNEX's Board of Directors?

TD SYNNEX's Board of Directors approved a new $2 billion share repurchase authorization.

What was the quarterly cash dividend declared by TD SYNNEX's Board of Directors?

TD SYNNEX's Board of Directors declared a quarterly cash dividend of $0.40 per common share.

TD SYNNEX Corporation

NYSE:SNX

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About SNX

welcome to synnex corporation (snx), a global leader in it distribution (technology solutions segment) and global business services (concentrix segment). founded in 1980, synnex is a $10.4 billion company with more than 53,000 associates worldwide and in 2014 was ranked no. 260 on the fortune 500 list. synnex partners with more than 300 world-leader technology manufacturers, helping them distribute their products through more than 20,000 value-added resellers primarily in north america. our focused channel categories include it systems, peripherals, system components, software, networking, and consumer electronics products. our vendor partners include hp, intel, panasonic, microsoft, lenovo, seagate, and many other world-class original equipment manufacturers. in addition to distribution, synnex provides business process outsourcing for technical support, renewals management, demand generation, direct sales, customer service, back-office processing, and it outsourcing. synnex creates